State Bar of California
Super Lawyers

OPR: Avoid possible suspension based on client returns

By Dennis Brager

Tax practitioners want to avoid the attention of the IRS's Office of Professional Responsibility (OPR) at all costs; sometimes, however, OPR turns up uninvited. A basic understanding of OPR's processes and procedures can help in preventing a bad situation from becoming worse.

Disciplinary Actions

OPR administers and enforces the regulations governing practice before the IRS. The regulations governing practice are set out in Title 31, Code of Federal Regulations, Part 10, and are published in pamphlet form as Treasury Department Circular No. 230. The current Director of OPR is Karen Hawkins, who previously was a partner at the tax controversy firm of Taggart and Hawkins in Oakland, California.

OPR may discipline practitioners in several ways including censure, suspension, monetary fines, or even disbarment from practice before the IRS. Practitioners who are suspended or disbarred may not, among other things:

  • Prepare tax returns;
  • Prepare or file other documents or correspond or communicate with the IRS;
  • Render written advice with respect to any entity, transaction, plan, or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion;
  • Represent a client at conferences, hearings, and meetings;
  • Execute waivers, consents, or closing agreements;
  • Receive a taxpayer's refund check or sign a tax return on behalf of a taxpayer;
  • File powers of attorney with the IRS; or
  • Accept assistance from another person (or request assistance) or assist another person (or offer assistance) if the assistance relates to a matter constituting practice before the IRS, or enlist another person for the purpose of aiding and abetting practice before the IRS.

This last provision is particularly problematic because it means that a suspended practitioner will be very limited in the functions he can perform for his employer, and may well be asked to leave his firm.

OPR is Cracking Down

The way that the majority of practitioners got in trouble with OPR in the past was by failing to take care of their own tax obligations. Practitioners are often shocked to discover that extended late filing, sometimes coupled with non payment, can result in suspension or even disbarment from practice before the IRS.

Hawkins has publicly pledged to move beyond simply going after delinquent practitioners, and intends to crack down on practitioners who ignore their duty of due diligence in preparing client returns. She pointed out that "[p]ractitioners may not ignore the implications of information already known, and must make reasonable inquiries if the information furnished by a client appears to be incorrect, inconsistent, or incomplete."

If a penalty under Internal Revenue Code (IRC) §6694(b) is imposed for willful, intentional, or reckless conduct in connection with the preparation of

a tax return, the examining agent is required to refer the case to OPR for further investigation. For that reason, it is critical that the imposition of the IRC §6694(b) be fought tooth and nail.

The Investigation Process

An attorney within OPR reviews allegations set forth in any referral to OPR. OPR's first contact with a practitioner is a "pre-allegation notice letter," which notifies the practitioner of the investigation and invites the practitioner to submit any relevant information.

If the practitioner's information does not resolve the matter, OPR sends an allegation letter specifying suspected violations of Circular 230. The practitioner may submit an additional response and may request a conference to be conducted in OPR's Washington, D.C., office or by telephone.

If the practitioner's response does not fully resolve the issue, the practitioner's case file is presented to a panel of OPR attorneys for review and discussion, and to propose a disciplinary sanction.

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